Maryland’s state pension fund had another sub-par investment performance for the year ending June 30, 2014, costing the state $1.16 billion. The fund’s percentage increase lagged behind the median state pension fund by 2.91 percentage points. This 2.91 percentage point difference on a $40 billion portfolio (at the start of the fiscal year) resulted in $1.16 billion in lost income for the state (i.e., 2.91 percent x $40 billion = $1.16 billion).

Taxpayers make up the difference between sub-par returns and median returns by paying more money into the pension fund. Alternatively, the government may ask state employees to accept less in pension benefits.